Growers seek tobacco pricing input

Burley tobacco growers took the first steps in December to obtain some influence on setting the price for their product.

The effort was sparked by the revelation of the terms of Philip Morris' 2008 contract, which included a price that many growers considered too low.

“When we heard the price (at a November grower meeting), it seemed that every farmer there couldn't believe it,” said Joe Spalding of Lebanon, Ky. “With incentives, it would be about the same price as for the 2007 crop.”

Spalding and many of the other farmers there decided on the spot they needed to be involved in pricing decisions before they reached that point. And they believe a farmer organization is needed to do this.

“That is the goal, to communicate our needs on these processes before they happen,” said Spalding. “We are not making demands, but the companies have to know there are going to be fewer burley farmers if they don't give better prices. We just want the chance to sit down and discuss this with them.

“We need an organization. It is not going to happen over the night, but we can't give up on it.”

Spalding said PM is the only company that has come out with a contract to date.

About 100 growers, all from Kentucky, met in Lebanon on Dec. 12 to gauge farmer interest. It was solid, and the growers decided to meet again at 6:30 p.m., Jan. 16, at Floral Hall on the Marion County, Ky. Fairgrounds in Lebanon. All interested burley growers were invited.

Don't expect fireworks, just negotiations to achieve a goal, said burley producer Bernie Cave of Campbellsville, Ky. “We want to keep everything positive,” said Cave. “We just want to be a part of the contract process.”

Compared to the days of the program, farmers have no one to represent them, he said. “Before the buyout, we were under the umbrella of the federal government and received some representation of our interests. But now we are on our own. We need to build a farmer friendly organization.”

Since the Dec. 12 meeting, Spalding said, he and a group of growers met in Somerset, Ky. with a member of the Philip Morris USA staff. At his suggestion they wrote to the PM USA leaf department in Richmond expressing their concerns. As of Jan. 6 there had not been a reply.

Southeast Farm Press spoke to two burley growers in the Rogersville, Tenn., area who have opinions similar to those of the Kentucky group, although they reached them independently.

Both Jody Allen and Shawn Light of Rogersville are convinced that getting some level of farmer input into the price-setting mechanism could give farmers confidence in the process.

The price proposed for 2008 is just too low, said Light.

“We need at least $1.90 and preferably $2 a pound to have the confidence to make the investments that are needed,” said Light. “Is $2 a pound too much to ask? If that was the price, I would go out tomorrow and build a 30 or 40 acre (multi-tier) barn on my home farm for more efficiency.”

Still, he wants to stay in the crop as long as he can and to do so, he has made one big investment recently: a new baler to produce big bales rather than the traditional small ones.

“I love growing tobacco,” he said. “I have made a big commitment to it.” Allen also has made some large investments in his tobacco facilities. Between the 2006 and 2007 crops, he spent about $90,000 for curing facilities and for vehicles to transport tobacco.

Both were approved for cost share funds from Philip Morris for these expenditures, although Allen said he hadn't received any payments yet.

At the London, Ky., market where Light and Allen sell, they calculate that 2007 deliveries so far have been averaging between $1.46 and $1.50.

Allen estimates variable cost of production at least $1.20 and $1.30 per pound.

The point is that if American tobacco is to continue to enjoy its worldwide reputation for flavor and aroma, growers must still feel they can afford to do what it takes. Otherwise, short cuts will surely occur, said Light.

This season, for instance, Light said he would have come out ahead if he had stopped irrigating when it became clear that he would not be able to attain a normal crop.

“But I kept at it. I didn't have to irrigate if I didn't want to, but I put the effort in it because I believed it would mean better quality,” he said.

Allen has become somewhat discouraged and is afraid there just may not be a significant market for his crop. Still, a quick end would be preferable to a slow death.

“If the companies don't need American burley, why don't they just tell us?” Allen said. “We will grow something else. Farmers would rather know the situation now than have to figure it out later.”